While it’s important to have money in the bank, it’s also vital to make that money grow: to invest it. While the term “get rich quick” is usually followed by the words “scheme” or “scam”, there are many long-term investments that can increase the money put into them by a sizable percentage. While most think of 401(k) retirement accounts, certificates of deposit, or stock market speculation, there’s another option that will return the money invested and more: it’s time to look at buying a business as a long term investment.
Business Market vs. Stock Market
There are parallels and stark differences between investing in a business and investing in a stock: both require you to do your research, both require significant capital to get sufficient returns, and both are made much easier with the use of a broker. However, the stock market is a passive process where random chance factors into the success of your chosen stocks and you can do nothing to influence them. However, when you invest in a business, you have full control and your dedication and passion can change the direction and the profitability of a business.
Picking the Right Business – Feel it in your Head, Heart and Gut before your Wallet!
There are several steps to finding the right business for your investment. By finding the perfect business for your skills, passions, and budget, you can maximize your investment and your returns.
- Selecting the Type of Business: Picking the right business is key, from a small single man business that can be done part-time or from home, to a fully staffed company. How much business and in what field are you most comfortable in?
- Locating the Perfect Business: Once you’ve got an idea of the type of business, it’s time to find the local business that best personifies it. Searching online is a good, start, but consider finding a business broker before you make any deals.
- Verifying the Business: Find a promising business? Even before reaching out, make sure to do your homework. Find reviews of the business, as well as its listing with the Better Business Bureau, and get a valuation performed by a business broker or certified valuation analyst.
- Evaluate the Business: Just like any investment, before you sign on the dotted line, make sure that the investment still lines up with your original plans.
- Acquire the Business: Lastly, you get down the brass tacks. Unlike stocks, the price of a business is negotiable.
The Two Payouts of Business Investment
Once you’ve bought a business, you have two sources of income to look forward to. The first is the profits from the business’s day-to-day operation, and the second is the business itself as an asset. As your business matures and expands, you have an asset you can sell to fund your next investment, or as a nest egg for retirement. These two sources of income – profits and your business’s equity – make it a powerful form of investment.
Want to learn more about buying a business? Contact George & Company, New England’s premiere business broker, with over 35 years of experience in buying and selling business, mergers and acquisitions, business valuation, and more. We’ll help you find the right business to invest in. To learn more about buying or selling a business, make sure to read more articles from our blog